Bitcoin Scaling Changes Finality Guarantees

Channels (Lightning) and sidechains (Liquid) outsource finality to a smaller, faster set of validators. This creates a trusted execution environment off-chain, with finality reverting to the base chain only for disputes or settlement.\n- Instant Finality: Payments final in ~1 second on Lightning.\n- Custodial Risk: Users trust watchtowers or federation members for security.

Proposed sidechains (like BIP-300) that use Bitcoin miners as a slow-motion multisig. Withdrawals are delayed for ~3 months, allowing the main chain to veto invalid state transitions. This preserves Bitcoin's PoW security but sacrifices liquidity.\n- Hash-Power Security: Inherits Bitcoin's >500 EH/s mining power.\n- Capital Lockup: Users face long withdrawal delays for full security.

A paradigm (BitVM, RGB) that moves computation off-chain but uses Bitcoin as a verification and dispute layer. Finality is cryptographically assured but requires users to run validating clients and monitor for fraud.\n- Non-Custodial Scaling: No trusted third parties for asset custody.\n- User Overhead: Finality depends on active client validation and fraud proofs.

Bitcoin's ~60-minute economic finality is incompatible with modern finance. Every scaling solution must answer: how do you accelerate settlement without compromising security?

• Core Constraint: 10-minute blocks + 6-confirmation heuristic.
• Market Impact: Precludes high-frequency swaps, liquid staking, and composable lending.

Decouple execution from consensus, posting data to Bitcoin for data availability while achieving fast finality on its own chain.

• Finality Model: Instant finality within the rollup's validator set.
• Security Inheritance: Relies on Bitcoin for censorship resistance and data permanence (~$1B+ in miner revenue).
• Trade-off: Introduces a new, smaller trust set for state validation.

A two-way peg secured by Bitcoin miners, creating sidechains with sovereign rule sets. Finality is probabilistic but faster, backed by miner hash power.

• Finality Model: Sidechain-specific, but merged mining aligns security incentives.
• Key Innovation: Miner-enforced withdrawals prevent theft, a core improvement over federated bridges.
• Trade-off: Requires a contentious soft fork and concentrates trust in miners.

Moves finality entirely off-chain. Bitcoin finality only secures the anchor point for a fraud proof or payment channel.

• Finality Model: Instant, with self-custody security.
• Scalability: Enables ~1M+ TPS for Lightning payments.
• Trade-off: Requires users to be online to defend their state, increasing complexity.

Brings Ethereum's optimistic rollup model to Bitcoin. Assumes transactions are valid unless challenged via a Bitcoin-settled fraud proof.

• Finality Model: Optimistic finality after a ~1-day challenge window.
• Breakthrough: Enables arbitrary computation without a Bitcoin soft fork.
• Trade-off: Long withdrawal delays and complex, expensive fraud proofs.

No single model wins. The ecosystem will stratify:

• Sovereign Rollups for app-specific chains (like Rollkit).
• Client-Side Validation for high-volume payments (Lightning).
• Drivechains/BitVM for generalized smart contracts.
• Result: Finality becomes a user-selected parameter, not a network constant.

Lightning Network settlements are not on-chain. A channel's state can be reverted if a party broadcasts an old state before the timeout. This creates a time-bound finality window where funds are at risk.

• Finality Delay: Requires waiting for on-chain dispute periods (~144 to 2016 blocks).
• Capital Lockup: High-value channels must lock capital for days to secure against fraud.

Bitcoin L2s like Stacks or rollup proposals rely on a sequencer to batch transactions. This introduces a single point of failure and censorship.

• Censorship Risk: Malicious sequencer can reorder or exclude transactions.
• Liveness Failure: If the sequencer goes offline, the L2 halts, breaking finality guarantees until a forced on-chain withdrawal (~7 days for optimistic models).

Bitcoin's limited block space makes posting L2 transaction data (data availability) expensive and competitive. If data isn't posted, users cannot reconstruct state and prove fraud.

• Cost Spikes: DA costs scale with mainnet congestion, threatening L2 economics.
• State Forks: Withheld data can lead to multiple valid state versions, breaking finality.

Zero-Knowledge proofs, as used by projects like Citrea, can provide near-instant cryptographic finality for Bitcoin L2s. A validity proof posted to Bitcoin settles the entire batch irrevocably.

• Trust Minimization: Finality depends on math, not honest majority or time delays.
• Bridge Security: Enables secure trust-minimized bridges to ecosystems like Ethereum or Solana.

To secure Lightning-like systems, federated watchtowers (e.g., Lightning Labs' model) or Multi-Party Computation (MPC) can act as a decentralized fraud detection layer.

• Uptime Assurance: Watchtowers monitor channels 24/7, submitting penalty transactions.
• Reduced Trust: MPC distributes secret key shares, removing single entity control.

Drivechains (BIPs 300/301) propose a minimal, Bitcoin-native sidechain framework. They offer a clear, albeit slow, finality bridge to the main chain, setting a baseline for more complex L2s.

• Predictable Finality: Withdrawals are finalized via a ~3 month miner voting process.
• Sovereign Security: Each sidechain manages its own trade-offs, isolating Bitcoin from experimental risks.